Part 1: That Old Midas Touch
“I am not a destroyer of companies. I am a liberator of them. The point is, ladies and gentlemen, that greed, for lack of a better word, is good. Greed is right. Greed works. Greed clarifies, cuts through and captures the essence of the evolutionary spirit. Greed, in all of its forms, greed for life, for money, for love, knowledge has marked the upward surge of mankind, and greed - you mark my words - will not only save Teldar Paper, but that other malfunctioning corporation called the USA. Thank you very much.”
- Gordon Gecko in Oliver Stone’s Wall Street
Greed is good - and until recently, greed was very nice to former Enron chairman Ken Lay, who presided over the biggest bankruptcy in history when his company collapsed in a confusion of cooked books. Finally charged with criminal offences a few years after his power trading con work, “Kenny boy,” as George W. Bush affectionately called him, could have been a character out of Tom Wolfe’s 1988 novel Bonfire of the Vanities, or a warm prop in Oliver Stone’s 1987 film Wall Street.
Both Wolfe’s novel and Stone’s film were conceived as epitaphs for the “decade of greed” - the eighties era of junk bonds, megamergers, insider trading, and Wolfe’s “masters of the universe.” In Bret Easton Ellis’ 1991 novel American Psycho, the central character is a broker by day and killer by night. From the messages of pop culture at the time, it seemed greed was on its way out - or at the very least, in for a good drubbing in pop-culture morality tales. In retrospect, the wave goodbye to greed was obviously premature.
Cut to 2008. There’s talk that the same accounting shell-game that bankrupted Enron was (and is) the norm for many Fortune 500 companies, and even some banks like JP Morgan, which await fiscal reckonings of their own. Greed is the guest who never left, who continued to party on through the nineties and into the new millennium, doing deals under the pseudonyms “irrational exuberance,” and “self-interested utility maximization.”
The heartfelt wish that Gecko was right all along still lingers among some pundits. Greed Is Good, But Only Later, declared a 2002 editorial in The New York Times, trying to find a shaft of light in a rubble of tech stock. Gecko’s thesis is given an interesting twist in the editorial: the payoff for the consumers from the greed of others comes later, after initial dislocations in the market. Writes Charles Morris: “Sure, it (Enron) may have phonied its books, possibly bilked California ratepayers out of billions of dollars, wiped out employees’ life savings to manage its stock price, misdirected millions of shareholders’ dollars into senior executives’ pockets. Though capitalism’s apologists hate to admit it, historically that’s the way raw markets work.”
No argument there. The author goes on to cite the deregulation of the telecommunications market and the drop of mortgage rates in the banking industry. He suggests US capitalism in the eighties, with its boiler room hustling of stocks and currencies, was simply the orchestra tuning up for the grand symphony of consumer good in the nineties.
“The same applies to Michael Milken’s decade of greed. Waste and abuse there was aplenty, but the junk bonds and the raiders they financed helped blow away a corporate old boy network that had proved unable to cope with competitive challenges from Asia and Europe. Without the violent brush-clearing of the 1980s, it is hard to imagine how America could have become the lean, mean, competitive machine that dominated the industrial world of the 1990s.”
There is, in Morris’ assessment of greed’s promise, no ethical issue to address. Robber barons simply do what nature has designed them to do, like sharks or hawks. And by culling the herd, the predators spur the survivors among us to move a little faster. Why then pay any regard to any moral dimension involving the astronomical wages, perks and parachutes paid out to corporate CEOs, the carnage to workers from nineties downsizing, or the bankruptcies suffered by small players from deliberately misleading brokerage advice? After all, the “masters of the universe” are not immoral - they are amoral. With their briefcases and Palm Pilots, they’ve ascended to a Nietzchean summit beyond good and evil. Morris has no problems with that, and by implication, neither should the rest of us once we understand how markets work.
It looks like Pope Gregory’s deadly sin of avarice - greed - has been spun into one of the Deadly Spins.
Greed may still be reckoned as a force for good by the elite, but the backlash from below means bankers and brokers still have to practise some caution, lest they create perception problems for their class. One story that perfectly illustrates the danger of being a bit too obvious dates back to July of 2001, when a group of investment bankers from Barclay’s Capital in the United Kingdom were fired for lavishing £44,000 - about $100,000 Canadian - on a celebratory meal at Pétrus, a trendy London restaurant. The six bankers polished off three exceedingly rare and costly bottles of Château Pétrus Bordeaux. They added at least one more label to the list, and topped off their tippling with a $13,100 dessert wine. The restaurant did not even charge the party for the several hundred dollars worth of food it consumed. According to the Guinness Book of World Records, it was the most expensive meal per capita, ever.
It’s easy to imagine the six Barclay’s boys laughing at their crazy, cavalier ways with a drinks menu. “Let’s do that again!” you can hear one saying in a plummy Oxbridge accent, while knocking back a glass worth more than a flight to Ibiza. Perhaps Charles Morris would have us believe the Barclay bankers’ madcap moment was no more than momentary period of market chaos, preceding a future for all Brits of affordable meals in four-star restaurants.
Economist Adam Smith called the beneficent force of the free market, so much wiser than its individual players, the “invisible hand.” But in the late nineties, the invisible hand curled up its fingers and become the invisible fist, smacking down currency markets across the globe, from Thailand to Russia to Latin America. We were, and are, assured these kind of dislocations are temporary aberrations, as electronic capital races around the globe in search of safe berths. Who would have known that the situation would have become even more rapacious in the new millennium? Now that the Republic of Halliburton has opened Iraq to risky business for US multinationals, we are seeing greed in its latest incarnation. Paper-thin justifications for war are being used for the evisceration of the public infrastructure and services of entire nations, with crony capitalism arriving to enslave the day.
When the masters of the universe address the peons who have failed to be born into wealth or invest properly, the concept of greed vanishes in the dry, dusty talk of the dismal science of economics. Sociologist Max Weber argued that from the Puritan era on, the pursuit of profit no longer had anything to do with the so-called sin of avarice - the individual’s greed for gain. Weber believed this had been replaced by a corporate greed that enslaved the individual working within its sphere. The personal sin had been sublimated, valorized and officially-sanctioned.
Karl Marx saw it somewhat differently. In his idea of “false consciousness” he saw capitalism distorting human desires, accentuating the worst among them. Greed became unfettered and pathological under capitalism, in his view.
“My power is as great as the power of money,” Marx wrote. “The properties of money are my properties and faculties. Thus, what I am and what I am capable of is by no means determined by my individuality. I am ugly, but I can buy myself the most beautiful women. Consequently, I am not ugly, for the effect of ugliness, its power of repulsion, is annulled by money... I am a wicked, dishonest man without conscience or intellect, but money is honoured and so also is its possessor. Money is the highest good. Money relieves me of the trouble of being dishonest.”
Marx was something of a preacher in his writings, regarding money as a false God that inevitably corrupts. He believed the sin of avarice would foment a revolution that would end capitalism for good. Marx was far better as a social historian than a prophet, however, and it’s Max Weber’s thesis that has stood the test of time.
We can go back further than Weber and Marx, and find the old parables of the pre-Christian era still have something to tell us about greed - perhaps now more than ever. Harper’s editor Lewis Lapham, scion of a wealthy California oil family, once noted the similarity of some in his social circle to King Midas, who is cursed with getting his wish granted that everything he touches turns to gold. “People who suffer from the pathology of avarice tend to shrivel, almost turn themselves into stone or ice. I mean, they become so cold, so closed to other people, to the possibility of the warmth of human experience and feeling that they transform themselves into objects.”
This magical transformation isn’t done like any other deal, over an insanely expensive lunch. The Geckos of the world shrivel and harden in increments, without leaving a paper trail.
Part II: CHUMP CHANGE AND FAIRY TALES
A few years back, a teacher friend shared an anecdote about baseball player Jackie Robinson with his high school students. Signed in 1947 to the Brooklyn Dodgers, Robinson was caled one day for a meeting with the managers, who offered to increase his wage to what would then be considered astronomical levels. In my friend's telling of this tale, Robinson turned the offer down because he thought his performance didn’t yet warrant such a vast sum. My friend was alarmed by his students’ take on this; they didn’t regard Robinson as a hero for his stand, but a “chump.”
We have taught our children well. After decades of obsessing over the incomes of super athletes and other pop-culture celebrities - including corporate CEOs - money has become the arbiter of all that’s noble and worthy. Greed is seen as natural and true to the human competitive spirit.
It’s difficult to move “off the grid” in a culture of greed that is so total. You may not be a player on the stock market, but your pension fund probably is. In the US, a great many people are banking on the market for their retirement. In a recent New Yorker cartoon illustrating Dante’s guide into the underworld, Virgil points down to hell’s inner circle. The damned hurry across the streets, looking up with worried expressions at numbers playing across huge screens. Not surprisingly, hell resembles Times Square, with pedestrians watching the performance of Dow and Nasdaq. The cartoon perfectly captures the volatile nature of finance in a stock market untethered to anything so mundane as real profits and company assets. In the late nineties and into the 2000s, investors were - and are - caught up in a speculative bubble that has only recently showed itself for what it’s always been: a consensual hallucination. (Which is not the same as saying the financial market is unreal, only that the value of stocks and currencies are what we believe them to be, expressed through buy-and-sell.)
The nineties boom was largely a mirage, though certainly one with effects in the real world. It was fueled by a metaphysical belief in the power of money.
According to mythologist Joseph Campbell, in medieval times the tallest buildings were the churches. By the nineteenth century, they were superceded by the seats of government. By the late twentieth century, the tallest structures on the horizon belonged to the houses of finance and commerce. This succession of pinnacles, from the Holy Roman Empire to the New World Disorder, perfectly captures the ability of money to mold the world to its purposes. From Chartres to the Sears Tower, we’ve always been rendering unto Caesar, just under different banners.
In its ability to transform itself across currencies, and finance anything from a trip to Disneyland to a voyage to the moon, money is rightly regarded as something magical: as powerful (and weightless) as sunlight in its capacity to make things grow, yet as unpredictable and dangerous as the weather. A common theme in Celtic fairy tales involves a villager who returns from fairyland with a sack of gold coins. In spite of the warning not to look into the sack before he arrives home, the visitor invariably takes a peek. The cash turns out to be coal - as deflated as the wheelbarrows full of Deutschmarks that German consumers pushed around after the collapse of the Weimar banking system.
A similar ambivalence about money is found in most of the world religions. In the Gospels, Jesus recognizes money as a competitive authority. In the words of writer James Buchan, he understood that “in embodying happiness and reward in tangible, earthly form, money is more impressively heaven than heaven.”
Aristotle, the Muslims and the medieval schoolmen were also deeply suspicious of money’s capacity to grow through interest. The birth of money from money was seen as unnatural because the offspring resembled the parent. This fiscal cloning was seen as an affront to the natural order. As a result, the practice of money lending was left to the Jews - along with a net surplus of suspicion and resentment.
In spite of the biblical injunction that “the desire for money is the root of all evil,” the Catholic church eventually made peace with money, and greed itself (You could buy your way into heaven, or even cover the passage of a dead relative who had sinned, by purchasing “indulgences” from clerics travelling door-to-door). It was money and credit, and the differing attitudes toward them, which fueled the great schisms of Calvinism and Lutheranism. In rejecting the greed of the Vatican, the Protestant movement endorsed the acquisition of money by the merchant class - as long as it was accomplished not in a spirit of greed, but for the glory of God.
In large part, this cultural endorsement powered mercantilism and its global explosion of western capital. But eventually, the Protestant angle on acquisitiveness was blown apart by money’s radioactive properties. Writes media critic Mark Dery: “The Protestant work ethic and Puritan abstemiousness that ensure a tractable, reliable workforce are at odds with the consumer economy, whose wheels are greased by instant gratification and the seductive promise of a return to carefree adolescent, even infantile pleasures.”
In the mad tilt-o-whirl of global investments and liquid capital we’re all riding on, the triumphs of the consumer economy are easily visible: cheap food, constant entertainment and affordable clothing. Harder to imagine is the final accounting - not from some accountancy firm, but rather history itself. The ecological fallout alone from greed has to be worked into the equations.
To classical economists, the environment is an “externality.” The same could be said of ethics, although British economist Maynard Keynes made a few token attempts to insert an ethical dimension into the political economy, by briefly but powerfully noting the corrosive forces of greed: “The love of money as a possession - as distinguished from the love of money as a means to the enjoyment and realities of life will be recognized for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease.”
For former financial reporter James Buchan, attempting an ethical study of money that Keynes left unfinished, “money enters into the system of values, and then displaces all other values like the cuckoo the eggs in a nest.”
In his book Frozen Desire, Buchan sums up the dark side of what the desire for money has brought to civilization. “For some time, in many places, money was thought to be bad, but it is now thought, on the whole, to be good. That inversion is the greatest to have occurred in the moral sentiments of the West. Desires that resisted incorporation into money turned pale and lost their power to convince: disinterested friendship, love and philanthropy became as suspect as the goals of once passionate wishes, honour and salvation. Miserliness, which places potential above actual gratification, had once seemed the disease of money ... gradually, it lost its pathology and became the condition of moral health.”
Private virtues become public virtues, according to Buchan, “and the old private virtues - prudence, thrift, kindness - become public vices in the market economy.” For Buchan, this is the great sadness at the heart of our civilization, “by using money, we convert our world into it.” That includes community itself, in a culture “where all human relations are disrupted by money.”
In our times, greed has been spun so hard it flies right off the page. And now, with the no-longer shocking revelations of the cooked accounting methods of Fortune 500 companies and the understanding of the debt-creation mechanism of “perpetual war for perpetual peace,” the global market economy threatens to break apart like a mirage on a desert plain. Greed, the deadly spin, has got us here, and like the characters in The New Yorker cartoon, we watch the figures on the exchanges, nervously hoping money will continue to perform its miracle of endless replication.
For the system to work a little longer, there must be enough people who will continue to believe that 15 percent annual return is a portfolio’s due, in spite of living on a finite Earth that will not sustain such increases, and that anyone who turns his back on a sure-fire “growth opportunity” is some species of fool. Or worse, “a chump.”
Yet it’s difficult to imagine how any culture can survive for long with dangerously high levels of personal credit fueled by fractional reserve banking. For civilization itself to evolve further, the rejection of greed will have to run deep into planetary culture and may involve rejecting the very premises of capital itself, which empowers the few at the expense of the many. We are on the knife’s edge; having dreamed this rapacious world of greed into existence, we have to dream our way out again.